Brazil Growth Continues. Ibovespa rose 0.51% to 79,752 points

Economic activity in Brazil expanded for a third straight month in November, the longest stretch of gains since 2014, suggesting strong momentum at the end of the year, Ibovespa had this Monday a session of slower rhythm and low liquidity, but with enough performance to place the index again in an upward path and in new historical pawns.

In the closing, the Ibovespa rose 0.51%, to 79,752 points, renewing the record recorded on January 8, when it stood at 79,379 points. At the intraday high of 79,847 points, the index also hit Friday’s record (12) of 79,440 points.

Central Bank’s economic activity index rose 0.49% from October after seasonal adjustments, in line with the median 0.50% forecast. The figures are the latest indication that Latin America’s largest economy may have shifted up a gear at the end of 2017 after a much-awaited investments revival in the third quarter.

The evaluation is that investors took advantage of the situation to take up positions in assets that spent the first weeks of the year in adjustment, in the case of retailers. After closing 2017 in strong rise, those papers arrived until Friday in a correction movement and, today, they returned to the positive field.

The reading is that the sector finds strength, at this moment, in the perspectives of resumption of economic growth. The Central Bank’s activity index (IBC-Br), released on Monday, showed an advance of 0.49%, compared to an average growth estimate of 0.44%.

Brazil’s gross domestic product GDP likely grew around 1% last year, snapping a two-year period of contraction as slow inflation and record low interest rates propped up consumer spending. Economists forecast 2.8% growth in 2018, according to a weekly central bank survey, which would be the fastest since 2013. Analysts nevertheless say uncertainty around this year’s presidential elections, the most wide-open in decades, could keep a lid on investments.

Today was the day of gains also for the steel sector, which gives continuity to the highs, in the wake of profit prospects for companies with readjustments in steel prices and amid the good recommendations of large banks. The Usiminas PNA (+ 2.54%, at R $ 11.30) was again among the highlights of the Ibovespa, in addition to the CSN (+ 2.57%, to R $ 10.78).

The leadership of the day’s gains was kept by the CPFL (+ 4.06%, at R $ 21.00), with investors betting that the State Grid, the company’s controller, will make a new offer for the acquisition of shares (OPA) to remove the electricity from the New Market, according to Valor. The CPFL disagrees with the rule of maintaining at least 15% of the outstanding shares after the Chinese concluded the purchase of the company last year..

Economists Increase 2018 GDP Growth Estimate To 2.70%. Economists surveyed by the Brazilian central bank increased their forecasts for the 2018 economic growth to 2.70%, from 2.69% last week. For 2019, projections remained at 2.80% for the second week, from 2.75% a month ago.

The forecast for Brazil’s debt-to-GDP ratio in 2018 decreased to 55.40% from 55.60% last week, while the 2019 estimate increased from 55.70% to 58.00%. Projections for the Brazilian industrial output growth in 2018 were raised for the third week to 3.20% from 3.14% a week before, while the 2019 forecast remained at 3% for the third consecutive week.